Machine Learning and Data Science Blueprints for Finance

Chapter 2. Developing a Machine Learning Model in Python

In terms of the platforms used for machine learning, there are many algorithms and programming languages. However, the Python ecosystem is one of the most dominant and fastest-growing programming languages for machine learning.

Given the popularity and high adoption rate of Python, we will use it as the main programming language throughout the book. This chapter provides an overview of a Python-based machine learning framework. First, we will review the details of Python-based packages used for machine learning, followed by the model development steps in the Python framework.

The steps of model development in Python presented in this chapter serve as the foundation for the case studies presented in the rest of the book. The Python framework can also be leveraged while developing any machine learning–based model in finance.

Why Python?

Some reasons for Python’s popularity are as follows:

• High-level syntax (compared to lower-level languages of C, Java, and C++). Applications can be developed by writing fewer lines of code, making Python attractive to beginners and advanced programmers alike.

• Efficient development lifecycle.

• Large collection of community-managed, open-source libraries.

• Strong portability.

The simplicity of Python has attracted many developers to create new libraries for machine learning, leading to strong adoption of Python.

Python Packages for Machine Learning

The main Python packages used for ...